Moody's downgrades toll road company

By Vianna Davila |
May 29, 2013
| Updated: May 29, 2013 10:01pm

Moody's Investor Service has downgraded the credit rating of the private company that built and operates the Texas 130 toll road extension, a rating that could continue to drop unless traffic “aggressively” grows on the road in the next two years.

Moody's issued the rating April 12 after putting the

SH 130 Concession Co., a partnership between Spanish-based Cintra and San Antonio's Zachry American Infrastructure, on review in March.

The toll road, from Seguin north to South Austin, was billed as the nation's fastest when it opened to drivers in late October, boasting an 85-mph speed limit.

But traffic counts on the road are about half the initial projections, the Moody's report said, forcing the company to dip into its financial reserves to make loan payments and raising concerns about the possibility of future default.

A downgraded credit rating can indicate a greater risk to bondholders.

The report lists the company outlook as negative, which indicates the possibility of future credit downgrading in the next one to two years, Moody's communications strategist David Jacobson said.

Moody's lowered the rating of a senior secured bank loan of $685.7 million from Baa3 to B1, a four-step decline, which Jacobson said is unusual.

Under an agreement with the Texas Department of Transportation, the company spent $1.4 billion to build the 41-mile extension of an existing, state-operated toll road. It will maintain and operate the extension for 50 years but share revenues with the state.

SH 130 issued a statement Wednesday, saying that despite the downgrade, company officials continue to have faith the project, meant to ease congestion on Interstate 35, will “benefit our investors and the people of Texas.”

“The company procures a rating from Moody's on an annual basis in accordance with the requirements of our financing,” the statement said. “We are meeting our contractual obligations to operate and maintain a world-class highway.”

On April 9, the San Antonio Express-News filed a request for Texas 130 traffic count and revenue figures with TxDOT, which maintains those traffic records.

The Texas attorney general's office had issued a previous ruling that the SH 130 Concession Co. had to release the information to the Express-News and the Austin American-Statesman, which had also filed a request.